In Morris & Ritchie Associates, Inc. v. H&H Rock, LLC, No. 1824, Sept. Term 2016 (Md. Ct. Spec. App. Jan. 30, 2018), the Court of Special Appeals held that when bills are presented in installments, each has its own statute of limitations, and there may be no legal requirement to pay earlier invoices in a series, even though later invoices may be collectible.
Morris & Ritchie Associates, Inc. (“MRA”), entered into contracts to perform civil engineering and other services between 2006 and 2014 for a land development project in Howard County of H&H Rock, LLC t/a H&H Rock Companies, Rock Realty, Inc. (collectively, the “Corporate Appellees”) and Mark K. Levy, the principal of the Corporate Appellees. MRA brought suit in the Circuit Court for Howard County on December 18, 2015, claiming that the Corporate Appellees failed to make payments on 51 invoices; that pursuant to a letter dated December 31, 2010, the Corporate Appellees agreed to pay; and that Mr. Levy acknowledged the debt and promised to pay in order to induce MRA to continue working. The circuit court granted summary judgment to the Corporate Appellees on 46 of 51 invoices (those that were originally sent before December 18, 2012) because they were barred by the three-year statute of limitations. The court rejected MRA’s argument that the cause of action did not accrue until all of the services had been provided by MRA.
On July 13, 2016, the Corporate Appellees tendered a check in the amount of $22,285.28 for the five invoices that were not barred by the statute of limitations.
MRA then filed a first amended complaint, which included counts of detrimental reliance/promissory estoppel and fraud and which added Levy as a defendant. The circuit court granted summary judgment to the defendants, and MRA appealed.
Before the Court of Special Appeals, the appellees argued that the appeal was moot because there was an accord and satisfaction of the entire debt. An accord and satisfaction requires a meeting of the minds of the parties. The court, however, did not find that the check was intended to resolve all of MRA’s claims, including those claims that the circuit court had ruled were untimely filed pursuant to the statute of limitations.
On appeal, the Court of Special Appeals noted that the parties entered into three contracts for a little more than $300,000. MRA’s proposals provided that billing would occur on a monthly basis. The court found that when a bill is payable in separate installments, “the statute of limitations begins to run on each individual installment as it becomes due” and not when the services were completed.
The court noted that Maryland law provides that acknowledgment of a debt that is barred by the statute of limitations removes the bar to pursuing collection of the debt. Further, the date of the acknowledgment is the date from which a new statute of limitations begins to run. Unfortunately, MRA had the burden to establish the tolling of the statute of limitations, either by acknowledgment or by course of conduct, but it was not able to do so.
The court found that parties may modify a contract by their course of conduct, but only “if it is unequivocal and the terms of modification are definite, certain, and intentional.” The court held that these standards were not met in connection with the original complaint.
The Court of Special Appeals remanded the case to the circuit court to have it decide whether there was an acknowledgment by Levy that tolled the statute of limitations under the amended complaint. But the court found that the circuit court correctly granted summary judgment to Levy on the fraud claim.
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